Hop into action with financial literacy this April
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April is Financial Literacy Month in the United States, providing an opportunity for all credit union employees to reflect on the impact of financial education programs and how they can contribute to the financial and social well-being of their members and communities. As professionals in the credit union industry, we all understand the importance of financial literacy, not only for individual members but also for the success of credit unions.
Financial literacy and wellbeing
Financial literacy is the ability to understand and effectively use financial skills and knowledge to make informed decisions about money. Financial education programs are designed to provide individuals with the knowledge and skills necessary to manage their finances and make sound financial decisions.
According to the Consumer Finance Protection Board (CFPB), financial wellbeing is defined as having financial security and financial freedom of choice, both in the present and in the future. More specifically, financial well-being is achieved when you:
Have control over day-to-day, month-to-month finances
Have the capacity to absorb a financial shock
Are on track to meet your financial goals
Have the financial freedom to make the choices that allow you to enjoy life
How do credit unions measure for success?
Credit unions can measure the success of their financial education programs through two key metrics: member growth and asset growth. Financial education programs can attract new members who may be seeking financial guidance and assistance while also improving the financial literacy of existing members, resulting in higher product utilization and lower attrition.
The NCUA's 2022 Annual Report states that credit union membership grew by 4.4%, with the number of members rising by 5.7 million from 129.6 million in 2021 to 135.3 million in 2022. Total assets of credit unions also increased by 5.3%, from $2.06 trillion in 2021 to $2.17 trillion in 2022. These numbers indicate that credit unions continue to be a popular choice for consumers seeking financial services.
Credit unions can use the NCUA's annual report benchmarks to compare their member and asset growth rates. This can help credit unions evaluate their financial education programs and promote member growth and identify areas for improvement.
Next steps
What actionable steps can credit unions take to maintain and improve their financial education programs? One approach is to collaborate with community partners, such as local schools, libraries and nonprofits, to expand the reach of financial education programs beyond current members. Credit unions can also consider offering incentives, such as reduced loan rates or cash bonuses, to members who complete financial education programs.
With financial literacy playing a crucial role in the financial and social well-being of individuals and communities, credit unions have a unique opportunity to make a positive impact. By managing financial literacy as an opportunity for success, credit unions can unlock the full potential of their members and communities.
If your credit union does not offer a financial education program, April is an ideal time to get started.
Tim McAlpine is the Founder & CEO of Currency Marketing. He is best known for developing the It's a Money Thing Financial Education Program that credit unions from around North America are using to connect with new young adult members. He is also a driving force behind CUES Emerge, an emerging leader program that combines online learning, peer collaboration and an exciting competition component.
